Minneapolis – Best Buy has completed the sale of its 50-percent interest in Best Buy Europe to its British partner Carphone Warehouse (CPW).
CPW, which also helped Best Buy revamp its now successful mobile business in the U.S., paid $570 million in cash, $123 million in CPW shares, and will pay $39 million in cash and 2.5 percent interest annually for the next two years for Best Buy’s share of the European operation.
In turn, Best Buy paid CPW about $43 million to terminate its interest in Best Buy’s mobile businesses in Mexico and China, and to satisfy any other outstanding obligations.
Analysts have lauded Best Buy CEO Hubert Joly for extricating the company from the costly and largely failed expansion attempt in Europe. Joly is also expected to pare back Best Buy’s other offshore ventures, particularly in China, in order to focus on strengthening the core U.S. business.
When the sale was announced in April Joly said the transaction “allows us to simplify our business, substantially improve our return on invested capital … and strengthen our balance sheet.”
Best Buy’s European venture struggled in recent years amid the weak economy, forcing 11 store closures in 2011. Projected revenue for fiscal 2014 is about $5.5 billion, and adjusted diluted earnings per share were expected to be “immaterial,” the partners said.
In 2011 Best Buy bought out Carphone Warehouse’s share of the profits from their Best Buy Mobile joint venture in the U.S. and Canada, and agreed to pay Carphone an annual consultancy fee of 5 million pounds for five years.